Income Tax Computation Sheet for F.Y 2017-18, AY 2018-19

by Richa Sharma Finance Expert

Income tax calculation has always been a matter of concern for every working person. Everyone wants to save their hard earned money as much as they can. Gone are the days when people used to rely on tax consultants and spent thousands of rupees to get their income tax filing done on time. With the introduction of e-filing of ITR, tax payers can file Income Tax Return at the online portal on their own. With the help of income tax computation sheet you can do the entire tax calculation all by yourself.

What Does Income Tax Computation Sheet Mean?

The format which simplifies the process of computation of income tax is a tax computation sheet. You can calculate your income tax for the financial year 2017-18 and Assessment Year 2018-19 all by yourself using the current computation sheet. All you need while computing your tax liability for the current FY is to provide correct income details in the correct heads of the income tax computation sheet. The calculation will be automatically done by the sheet.

You can file ITR on your own by using the current tax calculation sheet. The sheet is easy to use. First, you enter all important information needed to file income tax. Then, the sheet analyses the information provided and computes the overall taxable income of the tax payer. Finally, the sheet computes the amount of tax refundable or payable by applying the current tax deductions available and deducting the advance taxes which have already been paid by the tax payer. The sheet performs the income tax computation on your behalf.

Detailed computation of Income Tax

Income tax calculation constitutes of mainly three steps. You organize all the documents related to income, compute the net taxable income amount and then calculate the payable tax amount after deducting the rebates according to the current tax slab and also the amount you contributed towards tax in advance. Check out the detailed process of income tax computation:

Ø Computation of Taxable Income – To calculate the overall taxable income, you need to identify various sources of income first. As per the norms of Income Tax, there are five major sources of income:

· Salary of the Tax Payer – Income earned from the salary of an individual can be calculated by using Form 16 received from your employer.

* For calculating the gross salary, you need to add your basic pay, dearness allowance (DA), travel allowance (TA), DA over TA, house rent allowance and reimbursements, if any, mentioned in the salary slip and part B of Form 16. Also, add the bonus received in the current financial year to find out the gross pay.

* Once the gross pay is determined, deduct the exempted part of the house allowance, travel and medical expenditures to find out the net salary of the tax payer. For the financial year 2018-19, medical and travel allowances have been replaced with a standard deduction of ₹40 thousand. Every salaried individual can avail a deduction of 40 thousand in income tax computation.

· Income Earned From Let-Out House – The amount you earn from your rented out house or property also falls under taxable income. If the property is occupied for personal use, then also you need to calculate income from the property. For income tax computation you need to find out the following:

* Take the higher of the two - expected rent of the house, estimated from the valuation of similar property and the valuation of the house from municipal authorities.

* Compare the original amount of rent is received for the current financial year to find out the gross annual value of the property.

· Income Earned from Capital Assets – To find out the amount you earn from capital assets consider computing both your long and short-term ‘capital gains’ from the selling of capital assets.

· Income Earned from Profession and Business – The tax payer can calculate income earned from small scale business and profession on his own. For large business ventures, one needs to seek help of a professional CA to find out the income earned for income tax computation. For small-scale business, you can assess the income by considering the net profit mentioned in the ‘books of accounts’.

· Other Sources of Income – There are several other sources of income which cannot be specified under the above-mentioned sources. In this category usually comes the income earned from the interest of various investment and savings instruments. The interest earning sources generally consists of bank fixed deposits, bonds, recurring deposits, debentures, etc.

The primary step of income tax computation completes with the calculation of ‘gross total income’, which is the total sum of incomes earned under all 5 heads of income sources. In order to find out the taxable income, you have to deduct the tax exemptions available for various expenditures and financial responsibilities. Subtract the tax deductions applicable to you from the gross income calculated to compute overall taxable income.

Ø Computation of Tax Payable – The income tax computation process completes with the computation of payable tax amount. This payable amount can be calculated by following the current income tax slabs for financial year 2018-19. These tax slabs can be categorized according to the age group of tax payers.

· Income Tax Slab for Tax Payers Below the Age of 60yrs For Financial Year 2018-19:

Tax Slabs	Tax Rate	Education & Health Cess
Income equal to or below ₹2,50,000	Nil	Nil
Income above ₹2,50,000 to ₹5,00,000	5 percent	4 percent of IT
Income above ₹5,00,000 to ₹10,00,000	20 percent	4 percent of IT
Income abover ₹10,00,000	30 percent	4 percent of IT

· Income Tax Slab for Tax Payers Above the Age of 60yrs up to the Age of 80yrs For Financial Year 2018-19:

Tax Slabs	Tax Rate	Education & Health Cess
Income equal to or below ₹3,00,000	Nil	Nil
Income above ₹3,00,000 to ₹5,00,000	5 percent	4 percent of IT
Income above ₹5,00,000 to ₹10,00,000	20 percent	4 percent of IT
Income above ₹10,00,000	30 percent	4 percent of IT

· Income Tax Slab for Tax Payers Above the Age of 80yrs For Financial Year 2018-19:

Tax Slabs	Tax Rate	Education and Health Cess
Income equal to or below ₹5,00,000	Nil	Nil
Income above ₹5,00,000 to ₹10,00,000	20 percent	4 percent of IT
Income above ₹10,00,000	30 percent	4 percent of IT